Oil And Gas Exploration And Development Investment Projects Risk Factor Analysis And Real Options Evaluation Study

In comparison with developed countries, venture capital of oil exploration and development is still in the primary stage. Many scholars have studied the theories on its aero-operating mechanism while few have done research on its appraisal method. The lagging of appraisal method has delayed the development of oil exploration and development venture capital. Therefore it is of great significance to find an appropriate investment appraisal method under China's current economic situation. Option pricing theory is one of the greatest discoveries in finance in the last century. Its principle, method and conclusion can be applied in many economic and management fields. When option-pricing theory is applied in financial budgeting, it is calbed real options theory, which opens an entirely new way to investment appraisal petroleum enterprise.First, the paper attempted to introduce venture management theory to oil exploration and development. On the basis of characteristic of venture investment such as high profit with high risks, the risk theory of oil investment was analyzed and the aim, mode, scheme of risk management was studied. Secondly, as very special characteristic in oil investment, not only all kinds of risk factors were analyzed respectively, but also, such as aim, significance, principles of risk distinguishing were expounded. The process of analysis talked chiefly to differ method, and given out some advertent matter to manager compound real options model was build to appraise the investment decision of venture capital. Thirdly, through comparing of appraisal traditional method in special oil industry, it pointed out shortage. Furthermore, it is necessary and feasible to using real option to amend NPV. Finally, in allusion to fluctuate obvious of oil price, the paper applied Monte Carlo Simulation Analysis which be based on Wiener process to forecast oil price, then founded appraisal model of real option.The paper analyzed appraisal model through comparing traditional method, as well as problems of real options theory in oil exploration and development. Be faced with different risk factors, countermeasure was systemically studied. The work of the paper will help to improve the investment method and tools of China's oil venture capital and build a more scientific system to complement venture capital appraisal. Thus oil venture capital Company will evaluate the value and risks of their projects in a more precise way so that their investment efficiency of venture capital will be improved and the oil venture capital industry will come to prosperity.